Head of Emanuel's business panel vows to let sunlight in

Jeff Coen and David Heinzmann, Chicago Tribune reporters

The leader of an influential business panel that answers privately to Mayor Rahm Emanuel is promising a more open organization that addresses potential conflicts of interest involving its board members as they promote the city.

Michael Sacks, vice chairman of World Business Chicago and a key adviser to Emanuel, told the Tribune in an interview that more transparency is necessary to show the public that the top executives from local Fortune 500 corporations, banks and investment firms are motivated solely by a desire to promote and improve the city.

The group, which is partially funded with taxpayer money, includes some of Emanuel's biggest campaign contributors. Some members lead companies with millions of dollars in city business, and others have received government tax incentives from the city.

"My belief is that every single person that's working on this at the director level is working on this because they want to make a positive contribution, and that the only thing they want from their involvement with WBC is to be contributing in a positive way from a civic perspective," Sacks told the paper.

"They want it to be clear that that's all they want, and they don't want conflicts," Sacks said of the board. "So we're going to have a robust conflicts policy and make sure that we're dotting i's and crossing t's and standing for best practices."

The still-evolving plan will require WBC board members to fill out "conflicts questionnaires" and avoid using their roles as economic development advisers to directly benefit their own business interests. The new policies also will spell out when the group will release information about their closed board meetings and other activities on behalf of the city, Sacks said.

But the commitment to transparency will have limits.

The ethics policy itself eventually will be made public, Sacks said in the interview last week, but it has not been decided whether the disclosure forms board members complete will be public. The board likewise is considering whether to disclose if a board member declares a potential conflict.

The organization is considering allowing the public to attend portions of board meetings and releasing minutes, though executive sessions would be closed and a new 13-member executive committee that will weigh conflicts of interest would meet in private.

Under former Mayor Richard M. Daley, the group billed itself as the city's economic development arm, with its board members acting as high-powered recruiters and its staff working closely with businesses that might want to come to the city or expand here. According to the group's website, WBC "navigates the site selection process for businesses by providing economic and industry data, site location assistance, state and local incentive information, and bringing together key parties to spur and accelerate economic growth."

The new transparency pledge comes as Emanuel has expanded the group's role to include steering the city's planning for the G-8 and NATO summits that will bring world leaders here next spring and organizing a jobs plan for City Hall. And it comes as the city-funded organization drew more attention recently when Emanuel chaired a private meeting of the group's board, which he boosted to 48 members shortly after being sworn in.

The group's lack of disclosure was highlighted in a critical report by city Inspector General Joseph Ferguson shortly after Emanuel expanded the group last summer. Ferguson pointed out that the group had written letters during Daley's tenure advocating tax incentives for two companies — United Airlines and the Chicago Mercantile Exchange — while executives of those companies sat on the WBC board.

Even before the conflicts policy is completed, Sacks said WBC already has taken the step of all but abandoning advocating on behalf of any company seeking TIF funds. But that has a caveat, as WBC has decided its new executive committee can override the policy in special cases.

"That would be an extraordinarily high bar. I can't envision it," Sacks said. "And if it occurred, it would occur with transparency in a conflict-free environment. We're out of that business."

Other sections of the guidelines would cover everything from WBC's assistance to companies on site selection for their projects, Sacks said, to outlining what board members can do as individuals in the name of the organization.

The board will not make it policy for board members' companies to avoid doing city business, Sacks said. But he has declared that his own company, Grosvenor Capital Management, will not handle city pension business or otherwise take a Chicago contract.

"I want anybody who's looking at this to understand that we're just taking that out of the equation completely," Sacks said of his own firm. "My own feeling is — maybe it's the unfortunate state of affairs — but I can't contribute to the city from the civic perspective with credibility if I'm engaged in city business."

At least three other investment management companies — Credit Suisse, Ariel Investments and JPMorgan Chase & Co. — have WBC board members and are tied to city pension business.

Motorola Solutions, which has long-standing contracts to provide emergency radios to the city, is represented on the WBC board by CEO Greg Brown. And board member Anthony Anderson is a top executive at Ernst & Young, which has a $20 million human resources contract, according to city records.

The group also plans to "provide audited financial statements" of its books, but exactly when is still to be determined, Sacks said.

World Business Chicago is expected to get $1 million directly from the city budget next year for its operations and plans to collect private donations to help fund the city's G-8 and NATO hosting duties.

But one of the group's chief functions — negotiating to bring new companies to Chicago or to expand existing businesses — will have to stay private, Sacks said.

There have been 82 contacts between businesses and WBC so far in 2011, Sacks said, but it would be "massively self-defeating" to reveal too much.

"Anybody who wants to deal with us and have this conversation has to know that we're committed to protecting their confidentiality," he said. "When there's a win, it's public."

Protecting sensitive negotiations "is entirely different than having a robust conflicts resolution policy to make sure that WBC … is not favoring people that have conflicts with WBC as an organization," Sacks said. "They're different things."

That conflict policy is being organized by former city Inspector General David Hoffman, also a former assistant U.S. attorney who is now in private practice at the firm Sidley Austin. Hoffman endorsed Emanuel for mayor and reviewed his City Hall ethics plan, but said his pro bono handling of WBC's matter is unrelated.

The organization's receipt of public funds, the fact the mayor is its chairman and its mission for the city "absolutely requires best practices" on the ethics front, Hoffman said. By as soon as December, Hoffman said, he will have drafted detailed procedures for WBC that stress its goals of deciding which businesses to assist based on merits and having those decisions made by directors without hidden interests.

"This is a group that has been doing great work, but they've had no stated policy or procedure about how to handle perceived conflicts and other ethics situations," Hoffman said.

What WBC will likely adopt is not just a static set of rules but a framework to remind its staff and directors to constantly be aware of potential conflicts, he said. Anytime the organization wants to help a company come to Chicago or expand here, there should be an ingrained set of questions to consider, including who in the group has ties to the company.

"Situations change," Hoffman said. "You want key staff people and directors to be on the lookout for potential issues on an ongoing basis."

Sacks said he hopes the new ethics guidelines will help establish that WBC is interested only in raising the city's profile as global business destination, and not giving elite businesspeople who are already "pretty well networked up" yet another inside track.